How to Save Media

May 4, 2009

How to Save Media

Newspapers and magazines won’t vanish. But they must change.

Even a few years ago, Joseph
Addison and Sir Richard Steele, those 18th-century London gallants and the
founders of the Spectator,
would have recognized the forms and modes of business that characterized our
newspapers and magazines. Not now.

For 300 years, two related sources of revenues
sustained publications: subscriptions and advertising. The system worked
imperfectly. Most readers of newspapers and magazines were freeloaders,
borrowing copies someone else had bought; and because no one really knew how
many people read publications, or how advertisements influenced readers’ purchasing,
advertisers spent their monies inefficiently.

But so long as subscription and advertising
revenues grew, the system did work. In
turn, the business of publishing supported the profession of journalism, which was,
when all is said and done, a useful thing. In open societies, magazines and
newspapers were the most important exchanges in the free marketplace of ideas. Publications
informed, instructed, diverted, and delighted.

But the Internet taught readers they might read
stories whenever they liked without charge, and it offered companies more-efficient
ways to advertise. Both parties spent less. As a consequence, today the
business of media is sickly.

In recent months, the news about magazines and
newspapers, distressing for many years, has become alarming. During the first
quarter of 2009, the advertising revenues of newspapers declined, on average,
30 percent; in the last six months of 2008 (the most recent period for which we
have reliable numbers), subscriptions fell by 7 percent. The number of ad pages in consumer magazines
shrunk by 26 percent in the first quarter of the year; and while magazine
circulations are not declining as rapidly as those of newspapers, it is
becoming more and more expensive to maintain their rate bases (the circulation
numbers from which publishers derive advertising rates), and with fewer
advertisers willing to pay to reach those readers, a less and less rational
investment.

Everywhere, newspapers and
magazines are going broke. Sun-Times Media, the owner of 58 newspapers
including the Chicago Sun-Times,
declared bankruptcy at the end of March. The Star Tribune Holdings Corporation,
the Journal Register Company, and Philadelphia Newspapers LLC are all,
similarly, bankrupt. The Seattle
Post-Intelligencer now exists only on the Web. The Rocky Mountain News, Colorado’s oldest newspaper, is gone. The
business magazine Portfolio, upon
whose launch Condé Nast lavished more than $100 million, is gone. PC Magazine, gone. Domino, gone. Country Home, gone.
It’s a dolorous toll.

What can be done to save our
surviving newspapers and magazines? Among those who write about new media, a
fashionable wisdom has emerged, expressed most energetically by Clay Shirky, a
professor at New York University. In “Newspapers
and Thinking the Unthinkable,” a much-distributed post
on his blog, he writes, “Round and round [it] goes, with the people committed
to saving newspapers demanding to know ‘If the old model is broken, what will
work in its place?’ To which the answer is: Nothing. Nothing will work.”

The Götterdämmerung-of-mainstream-media
argument has a weak and a strong formulation. Shirky himself is an eloquent
exponent of the gentler version. He argues, “Society doesn’t need newspapers.
What we need is journalism.” Shirky believes that the coming decades will see a
variety of nonprofit experiments whose funding sources will be similar to those
that have sustained him
as an academic, such as endowments, sponsorships, and grants. One day, some
innovator will stumble upon something that will reliably subsidize the publications
of the future.

The strong version is most associated with Dave
Winer, a grumpy California software programmer best known for helping to
develop the Web-feed format RSS and for his blog, Scripting News. Winer has written, and not
without glee, “Fifteen years ago I was unhappy with the way journalism was
practiced in the tech industry, so I took matters into my own hands. And then
dozens of people did, and then hundreds followed, and now we get much better
information about tech. It will happen everywhere, in politics, education, the
military, health, science, you name it. The sources will fill in where we used
to need journalists. … Everyone is now a journalist.”

If media companies can’t earn money, and everyone
is a journalist, it follows that “amateurs” (Shirky) and “sources” (Winer) will
be part of a “decentralized” media (Winer), whose stories will be distributed
by “excitable 14-year-olds” (Shirky).

This is all folly and ignorance. Shirky, Winer,
and other evangelists know nothing about the business of media. True, the
journalists who write about these matters for mainstream media often know as
little; I didn’t understand much until I became the publisher of Technology Review as well as its editor in
chief. But Shirky and Winer are disgruntled consumers and, as bloggers,
advocates for an insurrection. Thus, they are to be read skeptically. Their
prescriptions would be more convincing if they were less polemical and better
informed by some knowledge of what publishers sell.

Shirky and Winer share the conviction that
media-as-a-­business, with its attendant professional writers, editors, art
directors, directors of consumer marketing, and advertising salespeople, is being
overthrown by ordinary people, using digital technologies. That’s because they
conflate mainstream media with printing presses. As Shirky explains, “Printing
presses are terrifically expensive to set up and to run. … [But] the
competition-deflecting effects of printing cost got destroyed by the internet,
where everyone pays for the infrastructure, and then everyone gets to use
it.”

For decades, most print
publications have cheaply rented presses owned by third parties–but let that
go. The printing press stands here as an objective correlative for the material
production and distribution of media. Shirky and Winer’s real error is that
the physical is the least
of it. The comparative advantage of
mainstream media is not the ownership of presses, but the collaboration of
professionals. The creation of good journalism is a tremendously laborious
process, requiring an infrastructure more expensive than any press. The
illustration and design of stories has an infrastructure, too. Developing an
audience that will attract particular advertisers requires another
infrastructure. Selling advertising requires yet another. These structures,
which allow publications to reach large, coherent audiences, can exist only
within complex organizations, mostly businesses.

Some of those structures
must be reinvented for the Internet. Others, particularly editorial, still work
well. I am sure of this, because the number of people who read newspapers and
magazines is growing.
Of course, with few exceptions that growth is all digital. To take one example,
between 14 million and 22 million read nytimes.com every month; the print
circulation of the weekday Times is just one million. In all, on any day, 32
million Americans read their news online. Those numbers suggest contented
customers. Of course
there is a good business for mainstream media in electronic publishing. The
absorbing question is how to pay for what pleases so many.

It is a canard that neither
mainstream media’s managers nor its journalists have good answers to that
question. There are plenty of stupid publishers and editors, and their
publications will
die; but there are many smart, technology-savvy leaders, too, and their publications
will prosper. While the details are still debated, the broad outlines of
tomorrow’s media are becoming clearer. Consumers must pay for more of what they
read; publishers and the media buyers who purchase advertising must be given
technologies that will make online display ads more competitive with the
keyword ads that search firms sell. Some of the things that must be done cannot
be done by the media itself; it won’t be easy, and it might not happen, but it
can be done.

Below is my prescription for saving magazines and
newspapers. Publishing is an involved and complicated business, and the
following points are, perhaps, tediously interrelated and technical. The
details will be of interest mainly to media professionals, but since it is
detail that has been lacking in similar prescriptions, specificity is valuable.
(A more concise, generalizing version of this column was published in the May
issue of Technology Review and can be
read online here.)

How to Save Media

A. Circulation, subscriptions, platforms, and frequency

1. Print is dying but is not
yet dead. Magazines and newspapers need a strategy for print even as they
prepare for the digital platforms of the future. Publishers should allow rate
bases to decline to organic levels, defined as circulations where 65 to 75
percent of readers renew every year with minimal consumer marketing. Paid
circulations should be much smaller,
and the foundation of new, electronic subscriptions (see A.3, A.4, and A.5).

2. For many decades,
publications were overdistributed to readers who didn’t really want them,
because publishers were former ad salesmen who hoped to profit by charging
advertisers the highest possible rates (see B1). Subscribers became used to
paying too little, because advertising revenues underwrote circulation costs. Publishers
should charge fewer readers (see A.1) more for subscriptions. Further, each
subscription should be healthily profitable within two to three years,
recouping the costs of customer acquisition.

3. Content that some readers pay for in one medium (now,
usually print) should never be offered without charge to other readers in another medium (usually electronic). Instead,
publishers should distribute editorial to their subscribers on a variety of
platforms (see A.5 below). This is not to say that much content should not be
freely available to readers and paid for by advertising revenues. (To learn what should be paid and what free,
see C.3 below.)

4. Just as publishers shouldn’t
worry about what platforms their readers prefer so long as that platform is
profitable, they should offer readers as much choice in subscriptions as is
rational. A reader should be able to buy
a lifetime’s subscription or subscribe for a year, a month, a week, or a day. If
it made sense, a reader should be able to buy a package of stories, or even one
story. The price of a subscription should reflect its duration and the
platforms on which it is delivered.

5. The most important
publishing platform of the future will probably be lightweight, thin, flexible
screens that use electronic ink. That’s
because the editorial distributed to such screens will be as interactive as
that on today’s websites yet retain the fonts, graphical design, and
illustrations and photographs of traditional media (a wonderfully rich visual
grammar that art directors labored over for centuries). But publishers must not
become fixated on platforms; they must regard them as mere distribution
channels favoring different kinds of content. Again, publishers should offer
their readers as much choice as is reasonable. Over the next decade, they should
distribute editorial content to personal computers over today’s Web, to small devices
like the iPhone, to larger devices like Amazon’s Kindle, to electronic-ink devices
as they emerge, and to print publications (at least for a little longer).

6. Printing and physical distribution
are expensive. For as long as they still print and mail publications,
publishers should do it less frequently. Monthly magazines can be printed
bimonthly; weekly magazines can be printed biweekly; newspapers can print on
weekends only.

B. Advertising, sponsorships, and
classifieds

1.
Since the founding of the Spectator, publishers
have overcharged advertisers for space in print publications, both by
overdistributing their publications (see A.2) and by delivering readers who
were indifferent to advertisers’ messages (see B.3). Thus, advertisers are
behaving rationally when they buy online advertising, which is more efficient
and more easily measured. Rather than resenting advertisers, or hoping that
they will somehow recover their enthusiasm for inefficiency and
unaccountability, publishers should offer their media partners better return on
their investments. Neither resentment nor hope are business strategies.

2. Today, the online ads most loved by advertisers are keyword or search
advertisements (the sponsored links that appear near search results on
Google.com and search sites, or that are sold by search firms and appear on
other sites). Advertisers love keywords because their effectiveness is
unambiguous: advertisers pay directly for click-throughs or transactions.
Spending on keywords grew 21 percent in 2008, mostly at the expense of print, local
television and radio, and Yellow Pages advertising; it now constitutes 45
percent of all online advertising. By comparison, the display or banner
advertising that media companies sell grew only 4 percent the same year. This
is a problem, because display advertising was meant to fund the great shift of
readers to new media. But banner advertising will compete with keyword ads only
when there are better audience measurement tools. Amazingly, today no one knows
how many people visit websites. No established third-party supplier of audience
measurement data is trusted. Internal Web logs exaggerate audiences. Yet better
audience measurement would allow advertisers and media buyers to do cross-media
comparisons, and it would benefit the vast majority of smaller media sites that
don’t have large audiences. Trusted audience figures could then be supplemented
by measurement of click-throughs or other kinds of engagement measurements,
thus making display advertising more valuable to advertisers. Happily, companies
including Google and the California startup Quantcast are working to measure
Web audiences in new and clever ways. (See “But Who’s
Counting?” in the March/April 2009 issue of Technology Review.)

3. In
addition to being clouded by disagreement about the size of Web audiences, banner
advertising suffers from deep structural problems that must be addressed before
advertisers will spend really large sums. These are various and daunting, but they
all involve, in one way or another, the absence of commonly accepted, automated
means to create, sell, serve, and track the performance of display ads. Again,
a number of companies are working to solve these difficulties.

4. Among the most promising advertising forms for
media companies is custom advertising. In these arrangements,
a publisher works directly with an advertiser and its agency to create a unique
campaign, attached to a particular editorial event, that targets a publisher’s
audience and integrates all the publisher’s platforms, often with a microsite
that harvests sales, leads, or whatever else the advertiser values. Technology Review has benefited from
such custom advertising with the governments of Spain and Singapore, and with companies
such as Microsoft and Pitney
Bowes. But the problem with custom advertising is that many advertisers,
emboldened by a depressed advertising market, wish to blur the lines between
editorial and advertising. Clear guidelines from industry associations like the
American Society of Magazine Editors (ASME), as well as a long tradition,
established rules about how advertisers and publishers should work together in
print; if publishers are to retain the trust of their readers, they must have
similar rules for electronic media. In the long run, such rules will benefit
advertisers, too, by preserving the audiences they wish to reach.

5. Classifieds, except in
the very narrow sense of job listings in professional publications, are no
longer part of the business of publishing. Get over it.

C. Editorial

1. Editors can charge readers for content that
is uniquely intelligent; that relies on proprietary data, investigation, or
analysis; that helps readers with their jobs, investments, or personal
consumption; or that is very expensively designed. Everything else should be available
free, because it is news or opinion, which are commodities and must be offered
up to the aggregators, social networks, and feeds. Such content can be
monetized (to use the ugly jargon of our industry) only through traffic, which
drives ad impressions. Here, although the quality of the editorial should meet
the minimal standards of a publication, editors shouldn’t invest too much time
or money: good enough is best.

2. Mostly, editors should give readers what they
say they want. This will take a sea change in the attitudes of editors. Indeed,
my own feelings in this matter have been overturned. As I rose through the
editorial ranks of various magazines, I was encouraged to cultivate a mild
contempt for readers. We disdained the market research our publishers commissioned,
telling ourselves that readers didn’t know what they wanted. But electronic media
and social technologies have had a paradoxical effect: on the one hand,
disappointed readers can abandon a publication with a click of a mouse or stab
of a thumb, and at the same time they have strengthened readers’ proprietorial sensibilities.
Hence, our rule at Technology Review has
become that about 80 percent of what we publish should satisfy our reader’
expectations, and the rest can blow their minds.

3. Update 5.5.2009. One of the the things that some readers say they
want is to be able to post comments about stories as well as their own stories
to the Web sites of media companies. Often, such readers want to be able to
communicate directly with one another, using social technologies. The readers
who want to do this are not very many, but they feel strongly about the
subject, and become angry if they suspect editors wish to be “gatekeepers”.
Editors must welcome such readerly participation, and should open
their editorial departments to the wider world. (For myself, I love to know
what our readers think and know.) Considered only as a business opportunity,
reader-generated content make sense: the content itself is free, the associated
costs are limited to Web hosting and developing the functionality whereby
readers can post to sites, and the content drives traffic and ad impressions.

4. Editorial departments
should become smaller. How small? Unless a newspaper or magazine has a
deep-pocketed patron, it must turn a real and predictable profit. If it has a
patron, a publication’s losses must be predictable and sustainable. Along with other
expenses, editorial budgets must retract until they are rational or the
publication will be shuttered. Accepting this will be inordinately difficult
for most editors; only their own termination or the bankruptcy of their company
will really convince them.

Technology Review made many of these changes
after I became publisher in 2004. The rest, we will be making during
the next few months. The coming years will demand yet more changes that I
cannot anticipate. It has all been very unpleasant, and the unpleasantness will
only continue. But this is what is necessary. For publishers to wish that
reality were otherwise is the height of fecklessness; it is, in fact, a species
of madness.

Things change or die, including once-cherished
organizations. Today’s newspapers and magazines will be transformed or replaced
by other publications, which will have new forms and modes of business. There
will be a great and terrible clearing: scores of newspapers and magazines will
vanish; those that survive will be much reduced; and most people employed as
journalists or media professionals today will have different jobs in five
years. At the same time, millions of Shirky’s
amateurs and Winer’s sources will flourish to bewitch readers. But anyone who
tells you that media-as-a-business is dying is wrong.